Goldman Sachs, Crazy Eddie and 'the kiss of death'

Graphic image printed on a T-shirt given away ...

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Any of you remember Crazy Eddie, the New York City discount chain that landed in bankruptcy after its original owners were sent to jail for all manner of  business fraud? Okay, it wasn’t as huge as Enron, but when Crazy Eddie went under many New Yorkers mourned not just the loss of a decent outlet for TVs but the awful commercials in which Eddie Antar bellowed that prices were INSAAAAANE!

Well, according to the former Crazy Eddie CFO — a convicted felon who now helps the good guys capture white-collar bad guys —  Goldman Sachs may have responded too hastily to the SEC charges relating to the deal it helped to construct with hedgie John Paulson. (If you haven’t read about the SEC fraud charges, WAKE UP! read the details here or click on any of my many numerous headline pulls in the right-hand column.)

In his post, Sam Antar explains both the psychological and legal tactics that the feds use to trap their prey.

Back in the day as the criminal CFO of Crazy Eddie, I received a surprise subpoena from the SEC late Friday afternoon. I had to wait until Monday before my attorneys had time to advise me on a course of action.

The “kiss of death” message is deliberately sent on Fridays to chill the bones of criminals. Some criminals wait in anxiety during the weekend until Monday to consult with their attorneys about what to do next. Other criminals or SEC targets like Goldman Sachs don’t want to wait until Monday. So they make rash decisions and major errors in prematurely reacting to the “kiss of death” message to their own peril and find themselves in legal quicksand.

Goldman Sachs chose not to wait until Monday and fully digest the implications of the SEC complaint. After a relatively short consultation with its attorneys, the company hastily issued a detailed press release later Friday afternoon that I believe will land it into deeper potential trouble. …

via White Collar Fraud: Did a Clever SEC Bait Goldman Sachs into Compounding Its Legal Problems With the “Kiss of Death” Message?.

(h/t The Big Picture)

Indeed, Goldman appears to have been caught completely off guard by the Friday announcement — even though it had received a Wells notice in July 2009, indicating that it was a target of an active investigation. The WSJ reports tonight that Goldman responded to the Wells notice in September. In March, Goldman contacted the SEC to check on the status of the investigation but no one responded to the request for an update. And apparently, Goldman didn’t mind that the lawyers at the SEC weren’t returning its phone call.

In his blog post, Antar zeroes in on Goldman’s assertion that the suit has no basis in “law and fact.”  Big mistake if it turns out the suit really does have a basis in law and fact. After his surprise indictment, Antar says he tried to cover up his tracks and ended up in much worse trouble; indeed, covering his tracks proved to be more troublesome than the original misdeeds. Antar warns that if Goldman’s knee-jerk statements turn out to be untrue or misleading, their troubles would only deepen.

And that’s not all Antar has to share with readers. It seems Antar and Goldman have something else in common besides the kiss of death. And that is Richard E. Simpson the SEC lawyer handling the Goldman litigation. Simpson was the man Antar took to calling the “Pit bull” for his ferocious and unrelenting pursuit of justice. He’s a formidable adversary even for the likes of Goldman Sachs.


10 thoughts on “Goldman Sachs, Crazy Eddie and 'the kiss of death'

  1. Pingback: Tweets that mention Goldman Sachs, Crazy Eddie and ‘the kiss of death’ - Nancy Miller - The New Wall St. - True/Slant --

  2. Nancy:

    Thank you for your insightful analysis and adding additional information about how the SEC caught Goldman Sachs off guard. I updated my blog post at the bottom to include your comments.

    Richard Simpson is a very formidable opponent for Goldman Sachs because unlike most lawyers at the SEC Division of Enforcement, he is a career man dedicated to his ideal of pursuing justice.

    For example, after I was whipped by Simpson back in the day, I became a “cooperating” witness for the SEC. Over a three year period, I logged over 3,000 phone calls to and from Simpson at all hours of the day and night. That does not even include dozens of face to face meetings. I felt like a had two full time jobs as a witness for the SEC.

    I did battle against Simpson twenty years ago. I am quite sure that today he is even more formidable.



  3. Thanks for putting that commercial back in my head!

    I had no idea this is what Crazy Eddie is doing with his time now. Interesting.

  4. Does the comparison the Crazy Eddie case bring to light the possibility that the Goldman Sachs ripoffs are a Big Apple cultural phenomena? My memory was that Cray Eddie was more known to be a volume seller of stereo equipment (notice the turntable and speakers on the t shirt). Accounting student are taught in classrooms to this very day how Crazy Eddie used empty boxes as facades for product inventory to dupe auditors.

  5. Quick question: Does anybody know if that is Gilbert Shelton cartoon art on the Crazy Eddie t-shirt? Sure looks like it.

  6. You can trust Goldman more than you can trust Obama: Goldman is a profit maker even if dishonest….Obama is a flat out job killer

  7. One of Crazy Eddie’s better lines was, “It’s Christmas in July!”, and it would seem that Goldman had a similar vision, tricking investors into believing there were riches to be had where right-minded thinking would conclude that there were none at all. But the worst part of this entire housing scandal is that in the end, it is just another big rip-off of poor people, another scheme by upper-crusters to transfer more wealth up the pyramid. I don’t feel so sorry about the banks and high-rolling investors who got taken by Goldman and the mortgage thieves, but I do feel for the many low-income people who were persuaded (and perhaps railroaded, by various economic and societal forces) to take out over-priced loans so they could “buy” crappy houses often situated in distant and deadening locations. (Even before the bubble burst, the Times ran a story about people, mostly of color, who were living in the Poconos and getting up at 4am to go by bus to work in NYC, etc.) If the United States had a reasonable housing policy and didn’t rely on a “free” market ruled by crooks, perhaps we’d not be in the mess we are in – and most likely we’d not have the ecologically disastrous -and soul-destroying – suburbs on our hands, either. There’s no good reason for the suburbs’s existence except that it helps a lot of corporations, from Sears to GE to Goldman, make a lot of money by selling everyone one of everything, from lawn mowers to fridges to mortgages. This housing model has been wrong-headed from day one.

  8. It is strange that this is what Antar is up to these days. And he runs a blog, amazing. Beyond the Friday notice and the Simpson coincidence, though, I think Goldman Sachs has certain unfortunate, privilege related rights that Crazy Eddies never had. GS can by any lawyer and has serious pull with politicians. What they did is criminal, though, and I am happy to see the SEC going after them, the golden firm of Wall Street. Maybe the SEC is making up for missing the boat on the Madoff scandal.

    • Nick,
      Goldman has more money to fund a defense. BUT, I think it has become the official sacrificial lamb in Washington. Congress, the White House, the regulators recognize that everyone who has suffered losses both big and small during the Great Recession are hungry for retribution. Goldman Sachs, because of its vaunted political connections, may fit the bill just so. It is an epic tale.

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